How Five Guys Got Us Eating Its Burgers

LORTON, VA. (TheStreet) -- Jerry Murrell, CEO and founder of Five Guys Burgers and Fries, loves eating burgers from his West Coast competitor, In-N-Out Burger.

That might seem strange, but Murrell doesn't see it.

"We love In-N-Out Burger. We love it," Murrell said in an interview with TheStreet last week. "In-N-Out Burger just opened up in Dallas and when they opened up our business almost doubled. We help them and they help us. We just love the way they run their business."

Murrell adds: "The more In-N-Out grows, the better it is for us. It creates a better image for the industry. The more better-burger [establishments] around, the better it is for everybody."

Five Guys, started in 1986 and named after Murrell's five sons, created what some refer to as a "cultlike following" despite minimal advertising. Consumers have flocked to the burger chain, and franchisees can't seem to get stores open fast enough.

Five Guys began franchising in 2002, but growth exploded in recent years as franchisees scooped up territories. The company has more than 800 stores in the U.S. and Canada and another 1,500 in development (with 300 expected to open this year). The company says all of its U.S. territories are sold out.

According to industry consultant Technomic, Five Guys sales rose by 37.8% last year, to $625 million, as unit counts rose by 34.7%, according to the 2011 Technomic Top 100 Fast Casual Chain Restaurant Report.

While Murrell seems just as amazed by the company's cult following as outsiders, he can give reasons for it: Five Guys is "fanatical" about their food. Meat is never frozen and buns are made by select bakeries with Five Guys specs, he says.

"We don't ever shop around for prices on our food. If we have a pickle for us that's costing us 10 times as much as it costs McDonalds (Stock Quote: MCD), we're still going to pay for that pickle because that's what we want," Murrell says. "If the price goes up we'll just pay it. We don't shop around. Some of our suppliers have been with us since we started in 1986."

The ability of Five Guys to offer a simple and consistent menu throughout their stores, engage customers as they wait for their order (think of all those shells to clean up from the complimentary while-you-wait peanuts) and "play into the trend of people wanting to know where their food comes from" adds to the company's success, says Valerie Killifer, senior editor of FastCasual.com.